We have two plants with significantly different cost structures. So we
intend to have two different standard costs, depending on the plant.
We will be shipping finished goods from Plant A to Plant B, where the
parts with be consolidated with other products and shipped together to
the customer. If Plant A has a higher standard cost than Plant B, then
when the part is received from Plant A into Plant B, it is received in
at Plant B's cost, and the variance hits the P & L as an expense. In
reality, no economic transaction has occurred, so there should be no
expense. And the auditors don't like it. So has anyone else come
across this problem and how have you dealt with it?
Barbara Keller
intend to have two different standard costs, depending on the plant.
We will be shipping finished goods from Plant A to Plant B, where the
parts with be consolidated with other products and shipped together to
the customer. If Plant A has a higher standard cost than Plant B, then
when the part is received from Plant A into Plant B, it is received in
at Plant B's cost, and the variance hits the P & L as an expense. In
reality, no economic transaction has occurred, so there should be no
expense. And the auditors don't like it. So has anyone else come
across this problem and how have you dealt with it?
Barbara Keller